Let's say you're spending some quality time with your favorite mobile app and an ad for a restaurant pops up on your phone. It's got great food and customers love it ... but it's 50 miles away. So much for checking out that place.

In the world of location-based mobile advertising, location is everything. Marketers rely on consumers' mobile location data to pinpoint where they are, where they shop, and what they buy so they can offer them relevant ads. But when the location isn't accurate, those ads are essentially useless.

According to Thinknear president Eli Portnoy, bad location information is creating a "dirty data" issue in the mobile ad industry. We talked to Portnoy about how this hurts advertisers, how Thinknear is addressing the problem, and why the company is taking the unusual step of offering Location Score Tags as a free open-source solution to the industry.

Interview conducted by Business Insider Studios. It has been edited for clarity and length.

Why do you think location accuracy is the biggest problem facing the mobile ad industry?

Eli Portnoy: In 2012, 10% of ads had location data, but now, two years later, over 67% of ad inventory includes location data. The problem is that, on average, only 34% of ad requests that include latitude and longitude data are accurate within 100 meters of a user’s location. That means advertisers are paying to target a user in a specific location, but the person isn’t really there. Advertisers aren’t getting what they paid for, performance suffers, and the whole industry ends up looking bad.

What's your solution?

EP: Internally, we developed our own Location Score technology to ensure we buy only highly accurate location inventory. But ultimately, the quality of data is driven by publishers and other inventory sources, so we needed a tool to help the industry measure accuracy. Location Score Tags are a new tool we’re releasing that allows marketers to use our scoring technology across any of their campaigns — whether the campaigns run through us or someone else. We want marketers to have access to a Location Score for all their campaigns and be able to compare the accuracy across different networks. The increased transparency will help speed the pace of change in the industry and improve data quality.

How exactly does it work?

EP: It's really simple. Marketers place a location tag on the creative and the mobile landing page, which sends the ad’s location data through our Location Score platform. Essentially, we’re pulling the location from the user’s device and comparing it to the location that is coming through the ad request. Then we plot the points on a map to show where the ad request reported the person to be, along with the person's actual location. The Location Score for a campaign is basically determined by the distance between the two points.

Would you say the majority of ad networks are way off on their location data?

EP: There’s a lot of dirty data out there, and we know that many in the industry are ignoring the issue. Time and again, we’ve seen that better accuracy leads to higher conversions and higher KPIs across the board. So if advertisers are getting bad location data, they’re going to end up getting bad metrics.

Most companies wouldn’t offer a service like this free. Why are you?

EP: Location Score Tags are not a business for us. We’re rolling this solution out for free because we want greater transparency in the industry, which will drive greater amounts of reliable data. We spent huge amounts of time, money, and resources building the most precise location-targeting capabilities in the industry. By giving it out for free, we hope that publishers, exchanges, and other inventory sources will use it to better understand the benefits of sending really good location data to networks such as Thinknear.

How are advertisers reacting to this?

Advertisers want to know they’re getting what they paid for. That’s really why we’re launching Location Score Tags. Advertisers are asking for transparency. They want to understand what’s actually going on in their campaigns, and this is a free tool that lets them do that.

What’s the ultimate goal for this service?

EP: Ultimately, the key message for advertisers and agencies is that location matters, but you have to have the right location. Our goal with Location Score Tags is to create transparency. The industry can’t fix what it doesn’t measure. We’ll keep building products that focus on accurate location data, because that accurate data leads to much better performance for marketers, which is good for us and good for the industry.